Pos Malaysia : worth the fuss to privatise?

When Pos Malaysia was listed as a public limited company, it baffled me. Why bother privatising a monopoly? Remove the profit element and instill healthy working culture, and Malaysians can be spared the profiteering increase of postage from RM0.30 to RM0.70.

If privatisation is to provide more efficient service then the excellent article below spelt out the less than ideal situation beneath the exciting images portrayed by Pos Malaysia for the past few years.







In addition to the crippling Transmile Group scandal which whacked RM200-RM300 million off the profits of Pos Malaysia, the article also highlighted that its chairman and managing director had resigned over irregularities in land sales and award of contracts.

http://business.feedfury.com/content/17725759-pos-malaysia-new-scandal-after-transmile-irregularities.html

The fact that the chairman and managing director (bumiputras, no less) could only resign* in protest suggested that there were higher powers at work that frustrated & probably prevented capable and honest professionals from taking the necessary corrective action.

This kind of working environment will deter high calibre overseas based Malaysians from coming back. This is more important than the 15% income tax abruptly announced by Najib of which the details have yet to be worked out.

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*foot note:

Very recently, the chairman took Pos Malaysia and Khazanah to court for breach of chairmanship contract.

http://www.sun2surf.com/article.cfm?id=60169


In the first suit, Adam is suing the Minister of Finance, the government and Pos Malaysia Bhd. In the second suit, which was filed separately, he named Khazanah Nasional Berhad managing director Tan Sri Azman Mokhtar as the defendant.

Adam told Bernama that his suit against Pos Malaysia had been settled amicably after he withdrew his legal action against it about three months ago.

- perhaps Pos Malaysia has to make peace knowing court action may not be advisable for them?

In the suit against Azman filed on Nov 4 last year, Adam alleged that due to unlawful interference by Azman, the government decided to terminate his contract through two letters signed by the Minister of Finance dated May 23 and May 26, 2008 whereas his appointment was supposed to end only on Feb 28, 2009.

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Yeah sure those are old stories dated 2008 but let's look at the audited accounts for 2010:

Pos Malaysia invested RM7.6 million into 3 associated companies, of which are all wiped out as useless investment, worth RM0. Of the 3, Elpos Print Sdn Bhd earned a revenue of RM12.5 million, but as its liabilities greater than its assets and even whole year's revenue, something is wrong. (Imagine you owe loans and debts which exceed your whole year salary...that is terrifying or down right stupid financial management)



If you look at the notes for related party transactions, Pos Malaysia gave Elpos Print Sdn Bhd RM10 million revenue out of its RM12 million...so how can a small company given a fat contract with a national monopoly can end up being debt ridden up to such a mess?




Elpos Print Sdn Bhd is 60% owned by Econlink Sdn Bhd and Pos Malaysia owns the remaining 40%.




According to Pos Malaysia's website here,

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http://www.pos.com.my/websitebm/main2.asp?c=/WebsiteBM/subsidiaries/Elpos.htm

Elpos Print Sdn Bhd merupakan salah satu daripada pencetak utama untuk Pos Malaysia Berhad. Elpos ditubuhkan secara perkongsian di antara Pos Malaysia Berhad dan Econlink Sdb Bhd pada tahun 1997.
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One would expect Pos Malaysia, in awarding what is effectively a public service subcontract, would exercise caution and chosen a reputable party to be prudent with public funds.

A reputable company should exhibit some healthy form of publicity, so as to project a positive image and provide relevant information to advertise itself. Many SMEs have their informative and sometimes interactive website to facilitate ease of business.

Yet, when an attempt to google up this concessionaire, all I get is a scanty picture below:



The company does not own a website, like many SMIs, to let potential customers get to know about basic facts of the company like who are the board of directors, catalogue of their products and services etc. For a company that has been a concessionaire of Pos Malaysia since the last century, surely there should be enough accumulated profits, expertise, track record to be a successful and independent enterprise.

Yet I only see a relatively subdued enterprise named as "pencetak utama" by Pos Malaysia being written off as an investment despite getting a secured and relatively sizeable source of income from Pos Malaysia. It is also contradictory for Pos Malaysia to call it a key supplier and a useless investment simultaneously. Frankly when you are getting a secured, multi-million contract doing printing work for a monopoly cum glc, it is very very hard to run your company into deep shit unless you are supremely unlucky or incompetent.

Sure, in light of the multi million and multi billion ringgit scandals that numb Malaysians into oblivion, the above seems like a small matter but yet, if Pos Malaysia that has been in operations for decades can't even do simple things right, then we can forget about becoming developed nation, Vision 2020, High Income Nation and all the other sales pitch for election


The lastest about Pos Malaysia though, is the disposal of Pos Malaysia by Khazanah to Syed Mokhtar

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http://www.todayonline.com/Business/EDC110423-0000325/DRB-to-buy-Msian-govts-stake-in-Pos-Malaysia

DRB to buy M'sian govt's stake in Pos Malaysia

04:46 AM Apr 23, 2011

KUALA LUMPUR - DRB-Hicom, a Malaysian automotives, construction and banking group controlled by billionaire Syed Mokhtar Al Bukhary, has won a race to become the biggest shareholder in the Malaysia's national postal company.

It will pay RM622.8 million (S$255.6 million), or RM3.60 per share, for a 32.2-per-cent stake in Pos Malaysia, according to an e-mailed statement by Khazanah Nasional yesterday. That is a 7-per-cent premium to the company's closing share price yesterday of RM3.37.

Khazanah, an investment arm of the Malaysian government, is divesting after Prime Minister Najib Razak called on state organisations to sell down some non-core local commercial holdings to help boost stock market liquidity and attract investment. DRB-Hicom beat four other rival bids which Khazanah did not name in the statement.


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In evaluating the bid from various parties, Najib administration awarded the sale to Syed Mokhtar base on the following argument:

"DRB-Hicom was chosen based on their overall bid, which offers not only a defined strategy but also an executable business plan and an acceptable offer price," Mr Azman Mokhtar, managing director of Khazanah....

I have previously written that according to the 2009 audited accounts of Tradewinds (M) Berhad (TW), TW sold sugar, a subsidized item, amounting to RM203 million or RM550K per day to Bukhary Sdn Bhd (BSB). The balance unpaid by BSB at end of 2009 was RM118 million or equivalent to 212 days of sales when according to the accounts, normal trade terms was 7 to 90 days.

For 2008, TW sold RM165 million worth of sugar to Bukhary Sdn Bhd and the receivables not collected from Bukhary Sdn Bhd of RM170 million even exceeded the whole year sale of sugar!

I would say it is apparently an excessively favourable treatment by a listed company accorded to a private company belonging to the plc’s controlling interest. As a basic principle, management of a public company must avoid getting into conflict of interest positions.

I am not quite sure what kind of deal the public would be getting from a personality with the above track record. Things can get interesting by the looks of things as per past events...

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http://talkaboutsharesmarket.blogspot.com/2010/06/tradewinds-syed-mokhtar-linked-firms.html


TRADEWINDS: Syed Mokhtar-linked firms’ donations questioned

Tradewinds Plantation Bhd’s (TPB) AGM today could be an interesting affair as the Minority Shareholder Watchdog Group (MSWG) has sent to the company a set of questions ranging from crude oil pricing to a donation of RM10 million made to the Albukhary International University, sources said.

Of particular interest to minority shareholders will be the RM10 million donation, which is deemed as excessive, representing about 20% of the company’s net profit. MSWG’s list of questions also include seeking clarity on its plans to build palm oil mills.

TPB’s 69.76% parent Tradewinds (M) Bhd is also understood to have received a letter from MSWG over its own contribution of RM10 million as well, to the same university. Tradewinds’ AGM is slated for June 22.

The RM10 million contribution by Tradewinds works out to about 12% of its net profit for FY09. Issues have cropped up as Tan Sri Syed Mokhtar Albukhary controls almost 43% of Tradewinds and has an interest in the university as well.

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Is DRB going to raise borrowings of RM622.8 million to make the acquisition? If that is so, then as Pos Malaysia only derive revenue from a public service from Malaysians hence there would be an additional RM622.8 million worth of national debt for all of us to chew on.

If vital national supply and services are concentrated into a few individuals then perhaps ETP stands for Elitist Transfers Programme.

6 comments:

  1. daylight robbery we rakyat will suffer in the near future

    ReplyDelete
  2. Holy cow- you just uncovered a biggie here.

    ReplyDelete
  3. http://www.malaysia-today.net/mtcolumns/from-around-the-blogs/39988-pos-malaysia-worth-the-fuss-to-privatise#comments

    written by batsman, April 25, 2011 15:01:31

    Aisehman - Wells Fargo and the Pony Express was certainly good investment. Just get rid of the thousands trying to get a cut for themselves and Pos Malaysia has lots of potential.
    +1 ...
    written by longjaafar, April 25, 2011 11:21:21

    There is a certain pattern to some of these take overs. When Robert Kuok was literally forced to give up his stake in the sugar industry, it was after decades of being refused for price increases. The moment it changed hands, there was not one, but two hefty price increase, which, by a stroke of a pen, made the company extremely profitable , by making consumers pay more.
    The Pos Malaysia case is almost similar. After a 100% postage increase (ordinary letters from 30 sen to 60 sen), the company will be sold to the same group, who can expect to make lots of money again. It was an easy exercise, because our gullible public will think it is "only a few sen increase" but multiply that by a few millions on a daily basis, and you get the picture.
    +15

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  4. The POS Malaysia Scandal is a very risky topic to say or pass comments so i wouldn't say about it.

    ReplyDelete
  5. Good Blog, thanks for sharing that was simply good
    Print Malaysia

    ReplyDelete